Private label credit card (PLCC) companies have plenty to deal with as retail sales slip and Buy Now, Pay Later (BNPL) players push installment loans out longer. Mercator expects the PLCC market to slip slightly in 2023, while branded network credit cards will gain slightly. The difference between PLCC and network credit cards is the linkage to retail merchants, who will have a tough 2023, as the economy boils. Where does trailing interest come in?
Bread was in front of the issue with a AAA-Visa co-brand. With 61 million members, the AAA card has a terrific audience for a credit card co-brand. The start, however, is rocky. Columbus-based NBC News reports about a quirky interest issue for consumers.
- Multiple customers with a specific credit card have questions about a certain charge greeting them in October, and it has ties to a central Ohio company.
- Google Trends showed a large spike on Thursday morning of people that searched for answers about “Bread trailing activity” in Columbus.
- They reported seeing a charge with the memo “Bread trailing activity” hit their AAA credit card statement. Multiple people said they spotted the charge after receiving replacement cards on Oct. 9, when AAA recently switched financial partners from Bank of America.
Here’s the real issue. Bread took over the Bank of America partnership. As the card converted the trailing interest, for carried-over balances, it stood out when labeled “trailing interest.” It could be that the charge is correct, though the conversion could have been easier had customers been advised in advance.
Interest calculations and disclosures are more important than ever, as the CFPB declared a potentially new focus area. We cover the topic in depth in this recent Mercator Viewpoint.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group.